A London bakery recently experienced the worst-case scenario of offering a Groupon for a small business, and it cost the owner thousands (via NBC Chicago).

Need a Cake bakery owner Rachel Brown decided to put up a 75% discount on a dozen cupcakes on the site, which dropped the price down to $10 from $40.

Apparently, people really love getting cupcakes cheap, because she was rushed by throngs of customers in a cupcake frenzy. 8,500 people signed up, and her crew of eight had to make 102,000 cupcakes to meet the orders.

Brown lost $3 per batch because she had to hire 25 extra workers to help, and she ended up losing $20,000 because of it, which a ton for a small biz. It wiped out her profits for the year, reports the Daily Mail.

“Without doubt, it was my worst ever business decision,” she told the BBC. “We had thousands of orders pouring in that really we hadn’t expected to have. A much larger company would have difficulty coping.”

Well, it looks like most small businesses think so. An overwhelming majority of 70% hate Groupon, if the latest survey from iContact is to be believed.

As for Brown and her bakery, the experience may have cost her 20 grand, but what about all the exposure she’s getting for her store? Great, right? It doesn’t hurt, but it probably wasn’t worth the cost.

Small businesses like this bakery thrive on relationships with their local customers, not crowds of outsiders coming in to snatch up a free lunch.

Getting new customers is great, but in this case, the bakery rewarded the wrong customers. Those 8,500 people that rushed for the Groupon probably won’t be coming back to pay for the same cupcakes at quadruple the price.

Only those the store has nurtured relationships with for a long time (in Brown’s case, 25 years), should be the ones rewarded. They’re the ones that keep coming back for more.

The iPhone 4 is still the most popular camera phone on Flickr. It’s also the most popular camera overall. There’s only one Android-powered phone that even comes close to competing with Apple’s phones. Even the iPhone 3G, which is now three generations old, is still crushing it.

The iPhone 4 is still the most popular camera phone on Flickr. It’s also the most popular camera overall. There’s only one Android-powered phone that even comes close to competing with Apple’s phones. Even the iPhone 3G, which is now three generations old, is still crushing it.

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… but rather what consumers/customers think you are… after costly re-branding campaigns, the following brands found that NO ONE cared.

See Overstock.com was still “overstock.com” in the consumers’ minds, even though O.com may be the shorter (easier to type) URL. Furthermore, this gaffe was even more laughable because the official site was O.co (O.com was – and still is – a non-existent site).

So the next time you think about doing a costly rebranding, DON’T. Think instead how you can invest that money into making your product or service better or serving your customers better.

And remember the Pepsi logo rebranding and the Tropicana package redesign that prompted lopped off 20% of its retail sales?

No one has quite figured it out yet, but there seems to be little doubt that tablet devices have their place on the couch to serve as a second screen while American’s enjoy their favorite past time — watching TV. In addition to many independentstartups we’ve discussed in the past, the old guard, that already owns most of broadcast TV stateside, has a startup of its own called ConnecTV. In development for two years already, ConnecTV is currently in beta and has the hopes to go live in January. The idea is of course to put what you might want to see on your second screen while you watch the main action on the big screen. This includes sports scores, statistics, as well as what your friends may or may-not be saying on Twitter or Facebook — and of course advertising. We’d be shocked if most tablet owners weren’t already using their slate in front of the TV and can imagine how many more might if there was a great app that brought it all together.

Digital Consigliere

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.